Ford Motor Company Plummets on Analyst Downgrade

Ford Motor Company (NYSE:F) plummeted after an analyst at Deutsche Bank issued a warning regarding the automakers’ outlook due to the strengthening competition in the auto industry and increasing regulatory costs.

Deutsche Bank analyst Rod Lache downgraded his rating for the shares of Ford Motor Company (NYSE:F) from Buy to Hold with 12-month price target of $16 per share.

The stock price of Ford Motor Company (NYSE:F) declined more than 3% to$14.47 per share at the time of this writing around 1:48 in the afternoon in New York.

Ford faces significant challenges

Lache believed that the entire auto industry including Ford Motor Company (NYSE:F) is facing significant challenges such as the declining prices of used cars, declining new-car affordability, rising interest rates, strong U.S. dollar that makes foreign vehicles more competitive in terms of pricing.

In addition, Lache emphasized that auto industry is also burdened by regulatory costs. He noted that the new requirements for fuel-efficiency were “unprecedented,” which resulted to the increase of prices for new vehicles.

The analysts believed that higher vehicle prices could discourage consumers from purchasing new vehicles in an environment where interest rates are increasing.

Ford’s new 2015 F-150, which incorporates a number of advanced but costly powertrain, light-weighting and safety technologies represent one of the most prominent early examples of this forthcoming change,” according to Lache.

He added, “At the same time the cost of electrification will continue to decline, and a key finding of our study is that electrified vehicles should reach cost parity with internal combustion vehicles by the early 2020s.”

Ford November sales

In November, Ford Motor Company (NYSE:F) reported a 9.9% decline in the sales of its F-series model cars compared in the same period last year. It was the fourth consecutive month for the automaker to record year-over-year sales decline.

The automaker reported that it sold total of 187,000 vehicles in the United States, down by 2% last month. The company anticipated the sales decline as it manages its inventory levels and the availability starts growing for the all New Ford Mustang, F-150 and transit models.